Location matters when it comes to deal-making, says new study

Location Matters When it Comes to Deal Making says new study from UofT’s Rotman School of Management.

Even six-year-olds know who you sit beside matters, whether you're in first grade or at a high-powered dinner.

But now a new study, using the U.S. Senate Chamber as its laboratory, provides documented evidence of that phenomenon. It shows that where a person is located influences who they interact with and who they will turn to in order to build support for their own agenda.

For the powerful however, seating arrangements don't make much of a difference. That's because the people they need support from usually come to them.

The study's researchers chose the Senate as "a window into how people rally support for their initiatives," said Christopher Liu, an assistant professor of strategic management at the University of Toronto's Rotman School of Management. Prof. Liu conducted the study with Rotman PhD student Jillian Chown.

The Senate was ideal for study because of its rich record-keeping. The researchers analyzed co-sponsorship patterns for bills proposed between 1979 and 2001. This was compared with seating charts kept for the same period. Detailed analysis was done on the distance between specific senators’ desks to test for the likelihood that senators sitting closer to each other might co-sponsor similar bills.

The study found that co-sponsorship of a senator’s bill was more likely to come from those sitting near them. Senators sitting close together were also more likely to co-sponsor the same bills. More senior -- and therefore more powerful -- senators however were not dependent on their senate location for support on legislative initiatives.

Although the study took place in a political forum, its findings have implications for other organizations that are trying to better understand the importance of where their employees are located and how to foster interactions between them.

"Geographic location is a managerial lever," said Prof. Liu. "You can't force people to work with one another. But you can make them share a bathroom, or pass one another in the hall.”

The Rotman School of Management at the University of Toronto is redesigning business education for the 21st century with a curriculum based on Integrative Thinking. Located in the world’s most diverse city, the Rotman School fosters a new way to think that enables the design of creative business solutions. For more information, visit www.rotman.utoronto.ca.

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